Pages: 597 - 599Abstract: This issue contains four papers, discussed at the October 2016 panel meeting in Florence and the April 2017 panel meeting in Valletta. They all touch on highly policy-relevant topics and have resulted in lively debates at the meetings. Two of the papers relate to the Brexit vote in June 2016, one paper discusses post-crisis changes in monetary policy conduct and one paper people’s decision on the timing of their retirement.PubDate: 2017-09-12DOI: 10.1093/epolic/eix016Issue No:Vol. 32, No. 92 (2017)

Authors:Becker S; Fetzer T, Novy D.Pages: 601 - 650Abstract: SUMMARYOn 23 June 2016, the British electorate voted to leave the European Union (EU). We analyse vote and turnout shares across 380 local authority areas in the United Kingdom. We find that exposure to the EU in terms of immigration and trade provides relatively little explanatory power for the referendum vote. Instead, we find that fundamental characteristics of the voting population were key drivers of the Vote Leave share, in particular their education profiles, their historical dependence on manufacturing employment as well as low income and high unemployment. At the much finer level of wards within cities, we find that areas with deprivation in terms of education, income and employment were more likely to vote Leave. Our results indicate that a higher turnout of younger voters, who were more likely to vote Remain, would not have overturned the referendum result. We also compare our UK results to voting patterns for the far-right leader Marine Le Pen in the 2017 French presidential election. We find similar factors driving the French vote. An out-of-sample prediction of the French vote using UK estimates performs reasonably well.PubDate: 2017-10-12DOI: 10.1093/epolic/eix012Issue No:Vol. 32, No. 92 (2017)

Authors:Dhingra S; Huang H, Ottaviano G, et al.Pages: 651 - 705Abstract: SUMMARYSampson and John Van Reenen'>This paper estimates the welfare effects of Brexit in the medium to long run, focusing on trade and fiscal transfers. We use a standard quantitative general equilibrium trade model with many countries and sectors and trade in intermediates. We simulate a range of counterfactuals reflecting alternative options for European Union (EU)–United Kingdom (UK) relations following Brexit. Welfare losses for the average UK household are 1.3% if the UK remains in the EU’s Single Market like Norway (a ‘soft Brexit’). Losses rise to 2.7% if the UK trades with the EU under World Trade Organization rules (a ‘hard Brexit’). A reduced-form approach that captures the dynamic effects of Brexit on productivity more than triples these losses and implies a decline in average income per capita of between 6.3% and 9.4%, partly via falls in foreign investment. The negative effects of Brexit are widely shared across the entire income distribution and are unlikely to be offset from new trade deals.PubDate: 2017-10-12DOI: 10.1093/epolic/eix015Issue No:Vol. 32, No. 92 (2017)

Authors:Blinder A; Ehrmann M, de Haan J, et al.Pages: 707 - 755Abstract: SUMMARYWe examine recent changes in monetary policy due to the financial crisis and ask whether they are likely to be temporary or permanent. We present evidence from two original surveys – one of central bank governors, the other of academic specialists. We find that central banks in crisis countries are more likely to have resorted to new policies, to have had discussions about changing mandates, and to have communicated more extensively. But thinking has changed more broadly. For instance, many central banks in non-crisis countries also report implementing macro-prudential measures. Looking forward, we expect central banks to have broader mandates, use macro-prudential tools more widely, and communicate more actively than before the crisis. While there is no consensus yet about the usefulness of unconventional monetary policies, we expect most of them will remain in central banks’ toolkits, as governors who gain experience with a particular tool are more likely to assess that tool positively. Finally, the relationship between central banks and their governments might well have changed, with central banks “crossing the line” into the political realm more often than in the past.PubDate: 2017-09-12DOI: 10.1093/epolic/eix013Issue No:Vol. 32, No. 92 (2017)

Authors:Merkle C; Schreiber P, Weber M.Pages: 757 - 809Abstract: SUMMARYIn a large online experiment, we relate the retirement timing decision to the disparity between the willingness-to-accept (WTA) and the willingness-to-pay (WTP). In the WTP treatment, participants indicate the maximum amount of monthly benefits they are willing to give up to retire early. In the WTA treatment, the minimum increase of monthly payments to delay retirement is elicited. Our results reveal that the framing of the decision problem strongly influences participants’ reservation price for early retirement. The WTA for early retirement is more than twice as high as the corresponding WTP. Using actual values from the German social security system as market prices, we demonstrate that the presentation in a WTA frame can induce early retirement. In this frame, the implicit probability of retiring early increases by 30 percentage points. We further show that the disparity between WTA and WTP is correlated with loss aversion. Repeating the analysis with data from a representative household survey (German SAVE panel), we find similar results.PubDate: 2017-09-12DOI: 10.1093/epolic/eix014Issue No:Vol. 32, No. 92 (2017)